Is Seoul Apartment Buying Sentiment at Rock Bottom? Sellers and Buyers Still 'Different Dreams in the Same Bed'

KB Buy-Sell Dominance Index Hits Bottom and Rebounds for 2 Consecutive Months
Post-Regulation Easing, Sellers' Psychological Ease Intensifies Tactical Standoff

[Asia Economy Reporter Kim Hyemin] Since the relaxation of real estate regulations, buying sentiment in Seoul has been gradually reviving. Although sellers still outnumber buyers, subtle changes are being detected in statistics as some transactions are being made mainly through urgent sales.

According to KB Kookmin Bank's monthly housing trend report on the 2nd, Seoul's Buyer Dominance Index in January was 20.9, up 0.04 points from the previous month. The Buyer Dominance Index represents the ratio of sellers to buyers as an index. It ranges from 0 to 200, and a higher index means there are more people wanting to buy houses than those wanting to sell.

The index, which had fallen to 19.9 in November last year, has been rising for two consecutive months after rebounding for the first time in eight months. Although it is still below the baseline (100), buying sentiment is slowly recovering. The recovery in buying sentiment is faster in the Gangnam area than in the Gangbuk area. The Buyer Dominance Index for the 11 districts south of the Han River rose from 18.9 in November last year to 21.4 this month.

Seoul's Transaction Activity Index, which shows the level of transaction activation, also rose 0.7 points from the previous month to 1.6 in January. This index is created by asking real estate agencies to select options such as 'active' or 'quiet.' If the index exceeds 100, it means more people responded that transactions are active than those who said they are quiet. This index recorded '0s' for five consecutive months from July last year. Although the market is still quiet, there are suggestions that it may have bottomed out.

However, it remains to be seen whether this will lead to a full recovery. In fact, the proportion of 'many buyers' in the Buyer Dominance Index has not increased, but rather the proportion of 'many sellers' has decreased. In the past, it was a one-sided market favoring buyers, but now sellers who were rushing to dispose of properties are withdrawing some listings, intensifying a standoff.

In reality, recent market transactions are mostly centered on urgent sales. Because of this, the recovery in buying sentiment is not leading to a rise in housing prices. In fact, the average apartment sale price in Seoul in January was 1,239.18 million KRW, down 25.03 million KRW from December last year. Especially in the Gangnam area, where buying sentiment has recovered more than in Gangbuk, the average apartment sale price fell to 1,478.65 million KRW, breaking below the 1.5 billion KRW mark.

Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, said, "Transactions may occur mainly through urgent sales at the bottom, but rather than a price rebound, the market will go through a process of absorbing listings," adding, "The conflicting expectations between sellers and buyers remain, and a power struggle between the two forces is expected to begin in earnest."